Compound Interest

by Rob PocockAssociate Vice President of Communications, Priority Health andAdjunct Assistant Professor of Communications and Political Science, Hope College

It was December 31, 1999. The end of a decade, of a century, and a millennium. Y2K created fears throughout IT departments worldwide. And most of you were around eleven years old.

Now, on that date Time magazine, which since 1927 has named its Man, uh, now Person of the Year, also elected to name a Person of the Century. Did your eleven-year old minds catch who that was? I'll come back to that...

But first: Congratulations! It's an auspicious occasion for which we gather today and a well-deserved recognition of your many honors. But enough about you. Let's talk about the future...okay, your future.

So who did the editors of Time deem worthy of being named Person of the Century? Albert Einstein...the man who the editors claimed embodied "...the very best of this century as well as our highest hopes for the next." (1) The reason I share this bit of historic trivia because when the Father of Relativity was asked what he considered to be the greatest invention in the history of man (2), he allegedly reported, "Compound interest." (3)

Now, compound interest isn't new to this century. In fact, Jesus' disciple Matthew underscored the importance of compound interest in the Parable of the Talents. The first two servants were greatly praised and handsomely rewarded for doubling the money with which they were entrusted. The third servant, who buried his talent to keep it safe, was not only penalized but chastised by the master upon his return: "You didn't even have enough sense to put it the bank so I could at least get interest?" (4)

In this bucket are 653 $1 coins, one to represent each of you graduating today. These coins were all minted in 2010, the year that they, like you, are going to go into circulation in our economy. Now, if I invest these coins today at a 10% annual return (optimistic in today's market, realize, but this day's occasion demands optimism), by the time you retire, these 653 coins would be worth $109,483.86. (6) That's the power of compound interest.My message to you today is this: Exploit the power of compound interest in every area of your life. Do it in two specific ways.

First, be a good steward of the material things you gain in life. Here's how I'm going to be a good steward of these 653 coins.

Step Number One: Invest immediately. I'm going to invest these coins today. As each of you crosses the stage and collects your diploma and returns to your seat, I'm going to give each of you one of these coins as a symbol of investing in your future. I want to buy shares of Jenny Moreau, Incorporated. Of Kaitlin Kessie, Incorporated. Of Sarah Mejia Incorporated. Of Brandon Mellot, Incorporated. Of Matt Ray Incorporated. Of Pete Zessin Incorporated. You get the idea. I want to invest in Christopher Harrison Incorporated. In Lauren Fitz, Incorporated. I'm going to invest these coins immediately by buying shares of "INSERT YOUR NAME HERE, Incorporated."

Step Two: Invest wisely. Because I'm investing in the Class of 2010, that's why I'm convinced I easily can earn 10% return. Because I'm going to have an incredibly balanced portfolio of teachers and preachers. Of statisticians and politicians. Of do-gooders and good-doers. Of people who work on naval bases and those who solve social cases. Of peace makers and home makers and care takers.

And here's Step Three: Invest for the long term. In order for these coins to reach their nearly $110,000 potential, I'm going to have to invest them for the next 50 years. Now, some of you may have hoped to retire sooner than that, but your parents, my wife Cindy and I need you in the workforce a little longer to fund our Social Security... deal?

Now that you know how I'm going to be a good steward of these 653 coins, let me ask you this: What are you going to do to be a good steward of the countless investments that have been made in your life culminating in what we pause to celebrate today?

What will you choose to do with this coin and all it symbolizes?

Will you choose to keep it as a memento of today's occasion? I'm cool with that.Will you choose to spend it? If so, I hope you really enjoy that candy bar or breakfast burrito.

Or will you choose to throw it back in the bucket where it will be invested in the Hope College Annual Fund in honor of the Class of 2010? If so, I pray that it sets you on a lifetime of investing not only your money but your time in those causes whose missions you embrace.

But much more important than picking up this coin as you cross the stage today, is the fact you're going to pick up your diploma as well. Now, I've set a benchmark for what kind of compound interest you can expect from this coin. What sort of compound interest are you going to expect from... no, no, no, no, no, what kind of compound interest are you going to demand... from your diploma?

And that leads me to my second point: In addition to being a good steward of the material things in life, I encourage you to be an exceptional steward of the things in life that really matter.

Now, while the formula for calculating compound interest on a diploma probably isn't quite as easily defined as that for a coin, the steps I suggest remain the same: invest immediately, invest wisely and invest for the long term. And just as I invested wisely in the lives that all of you are about to live, I encourage you to maintain a balanced portfolio as well. You will do that by investing in every dimension of your life.

The diamond ring that I wear on my right hand is the constant reminder that I have to be a good steward of my life and to keep balance. It belonged to my older brother, Fred, who, frankly, didn't do a very good job at maintaining balance in his life. In fact he had two passions:

His first passion was work. And that passion enabled him to achieve a professional reputation and a financial success that I can only dream of hitting.His second passion was vodka. And one month shy of his 34th birthday, his liver threw in the towel. And in June of 1985 when my family should have been gathering to celebrate our daughter's first birthday, we buried the uncle that she and her older brother would only come to know through the stories we continue to tell.

Find balance in your life. To that end, I encourage you to consider making four promises. Now, I love this definition: "Integrity is keeping the promises we make to our selves." (7) So if you aren't ready to make one of these promises today, that's okay. Just slide it in your hip pocket and pull it out when and if you are.Promise one: Promise yourself that you'll identify ways to earn compound interest intellectually. Don't let the last good book that you read be the one that Doc Hemenway required in one of his amazing classes. Embrace a genuine curiosity, challenge yourself to learn something new each day. Taste new foods. Meet new people. Get waist-deep into uncharted waters.

Number two: Promise yourself that you'll live a lifestyle that seeks compound interest physically. Don't let Coach Van Wieren's Health Dynamics class be the last time you intentionally think about good nutrition and regular exercise. Moderation is an incredible habit that will provide a wonderful return on investment. In what ways will you seek compound interest on your physical health?Here's a third: Promise yourself that you will earn compound interest socially. Don't let Dance Marathon be the last time that you express your love for people that you've never even met. Our world craves servant leaders. And I'm excited to see the many ways that each of you gives back to the communities in which you live. "Service is the rent we pay for the privilege of living on this earth." (8)

Here's the fourth: Promise yourself that you'll earn compound interest spiritually. Don't let last Sunday's Gathering be the last worship service you attend for a while simply because all the churches where you live are "boring." Faith must be nurtured and nourished. "A vibrant faith impacts every aspect of our lives as we love God with all our heart, mind, soul and strength, and our neighbor as we love ourselves." (9)

In closing, let me illustrate what being an exceptional steward of the things in life that really matter might look like. I want to introduce you to a man whose life epitomized compound interest.

Bill Brown claimed to stand 5'7" tall although he was prone to exaggeration. But in the eyes of those who knew Bill, he was a giant of a man.

Born in the small town of Cadiz, Ohio, he loved fast cars and played high school football. In the summers he crossed the Ohio state line and worked in the coal mines of West Virginia. A rather lackluster academic career made enlisting in the army and a tour in Vietnam his best option. And the GI Bill proved to be his compound interest where he eventually earned a bachelor's degree from Duquesne. He enrolled in a night law school in Cleveland, the only one that would accept him. And he later transferred to Ohio Northern where upon handing him his juris doctor degree the dean of the university looked him in the eye and said, "Bill Brown, you're never going to amount to much." Ouch!

But Bill knew the power of compound interest and he was gracious enough to invite that Dean to sit on the stage when Bill was sworn in as Ohio's youngest Attorney General.

In May of 1974, I was wrapping up my freshman year at Hope College and Bill married my sister, Cheryl.

Bill knew the power of compound interest especially on those occasions when life throws up those unexpected obstacles. And after losing in the primary in his run for governor of Ohio, Bill joined one of those fancy law firms housed in the closest thing that downtown Columbus has to a skyscraper.

On November 3, 1999, I received an early morning phone call from my sister. During his morning exercise routine on the treadmill in their basement, at age 59, Bill had suffered a fatal heart attack. When I arrived in Columbus later that day, I found my sister among a sea of Bill's law partners all on their cell phones making arrangements. My sister, obviously distraught, hadn't taken a phone call all day long.

During the evening, one of the partners answered the home phone and said, "Cheryl, you should take this." It was Senator John Glenn. You may know of him from your history books: the first American to orbit the earth in 1962 and the oldest man to enter space in 1998. Senator Glenn was calling to offer his condolences and to let Cheryl know that he and his wife, Annie, would flying in for the service.

As soon as Cheryl hit the "End" button the phone rang immediately and without thinking, she answered it, for the first time all day. The look on her face shouted volumes.

"Mrs. Brown," the caller began tentatively. "I just heard the news about Mr. Brown. You don't know me, but I'm standing here at his desk, and there was a speed dial labeled 'home.' You see, Mrs. Brown, I clean two of the floors in this office building and your husband is the only employee who ever took the time to learn my name and stopped to talk every time he saw me. I just had to call and tell you how sorry I am. I'm going to miss Mr. Brown."

When my time on this earth comes to an end, how incredibly cool would it be if a true American legend called to offer her condolences. But I know that I would have been a good steward of the important things in life if the person who cleans my office calls to say that I'll be missed.

To the graduating Class of 2010: Congratulations. Now go exploit the power of compound interest in every area of your life.

Footnotes:

(1) Time Magazine, December 31, 1999

(2) Snopes.com

(3) Mignon McLaughlin. 1913-1983. American journalist and author.

(4) Matthew 25:14-30

(5) Business Dictionary.com

(6) Compounding Interest Calculator, www.moneychimp.com[2]. Compound interest added at the start of each compounding period 12 times annually.